HISTORY OF THE 0.7% ODA TARGET
Original text from DAC Journal 2002, Vol 3 No 4, pages III-9 – III-11
Revised March 2016
By far the best known international target in the aid field is that of raising official development
assistance (ODA) to 0.7% of donors’ national income.
The target grew out of an earlier suggestion to transfer 1% of donor countries’ income to developing
countries. According to Indian economist Jagdish Bhagwati, this “was the idea of Sir Arthur Lewis,
the economist who was adviser to Hugh Gaitskell, leader of the British Labour Party, who wanted a
target for his political platform in the 1950s.” 1 The proposal was first advanced for international
consideration by the World Council of Churches in 1958. The definitions of its numerator and
denominator were refined through the 1960s, and all the then DAC members subscribed to it in
1968. But once it became defined as including net private flows, a major flaw became evident –
governments had no means of programming or even predicting the private part of the flows, which
even then made up nearly half the total. 2
This drawback stimulated efforts to define a separate sub-target for official flows. At the second
meeting of UNCTAD, held in New Delhi in 1968, its Secretary-General, Raúl Prebisch, proposed that
“a minimum figure of 0.75% [of GNP] could be established for net official aid”. Some but not all
developed countries accepted this target. 3
Developing countries were also pressing for increased concessional financing. At the first ministerial
meeting of the G-77, at Algiers in 1967, they called for “a separate minimum target…for the official
component of aid flows, net of amortisation and interest payments”. 4
This idea was taken up by the Pearson Commission, appointed by World Bank President McNamara
in 1968. The Commission found good arguments for a new target for the concessional part of official
flows, or ODA. In considering its level, the Commission built on the 0.75% target for total official
flows. Since the non-concessional component of these flows is repayable, its net volume is small.
1
Jagdish Bhagwati, “A Chance to Lift the Aid Curse”, Wall Street Journal, 22 March 2005, available at
http://www.columbia.edu/~jb38/papers/pdf/WSJ_Foreign_Aid_Op_Ed.pdf. The Labour Party’s 1959 manifesto (available at
http://www.politicsresources.net/area/uk/man/lab59.htm) indeed stated that “This is why we have solemnly pledged ourselves to devote
an average of 1 per cent of our national income each year to helping the underdeveloped areas.” The first mention of the commitment
was a couple of years earlier: “As long ago as 1957, the Labour Party announced in its Colonial Policy pamphlet on Economic Aid that ‘the
next Labour Government would therefore at once announce plans to expand Britain’s aid by allocating an average of 1% of our national
income over a period of years as Britain’s contribution.’” [“One Per Cent and All That”, Development Policy Review, volume A1, issue 1,
page 68; available at http://onlinelibrary.wiley.com/doi/10.1111/j.1467-7679.1966.tb00206.x/full]
2
For further background on the 1% target, see Development Co-operation, 1999 Report, OECD, Paris, 2000, pp. 45-6, available at
http://www.oecd.org/dac/stats/documentupload/OnePercentTarget.pdf.
3
The Proceedings of the United Nations Conference on Trade and Development (UNCTAD), Second Session, Annex 1, Decision 27(II),
paragraph 7, specified that some developed countries declared their willingness, within the framework of the 1% target for total flows, to
provide 0.75% of GNP in net flows of official resources. The decision was adopted by 69 votes to nil, but with 8 abstentions. See
http://unctad.org/en/Docs/td97vol1_en.pdf, pp. 38-9.
4
First Ministerial Meeting of the Group of 77: Charter of Algiers, 1967, Section C.1(a).
The Commission’s 1969 Report therefore proposed that ODA “be raised to 0.70% of donor GNP by
1975, and in no case later than 1980”. 5
This suggestion was taken up in intense negotiations in the United Nations over a development
strategy for the 1970s – where aid volume was a key sticking point between developed and
developing countries. For most of the course of the negotiations, developing countries pressed for
the UNCTAD target of 0.75% of GNP in total official flows. But when negotiations stalled a couple of
weeks before the General Assembly was due to vote on the Resolution, they substituted the Pearson
Commission target of 0.7% of GNP in official development assistance. 6
This broke the impasse, and although most donor countries expressed some continuing reservations,
the 0.7% target was formally recognised on 24 October 1970 when the UN General Assembly
adopted a Resolution which included the goal that “Each economically advanced country will
progressively increase its official development assistance to the developing countries and will exert
its best efforts to reach a minimum net amount of 0.7% of its gross national product at market prices
by the middle of the Decade.” 7
The adoption of the 0.7% target for ODA built on the definition of this concept by the DAC in 1969 as
the flow of grants and soft loans from the donor’s public sector for developmental purposes, net of
repayments of capital, but disregarding interest. This definition was tightened in 1972 by the
addition of a minimum level of grant element that loans would have to meet to qualify as ODA. 8
Through the 1970s, the new target gained in acceptance, but there remained some exceptions. The
United States made clear that, while it supported the general aims of the Resolution, it did not
subscribe to specific targets or timetables. 9 Switzerland was not a Member of the United Nations at
the time, and did not adopt the target. Most other DAC Member countries have at one time or
another accepted it, at least as a long-term objective, and it has been repeatedly re-endorsed at
international conferences on aid and development down to the present day.
Sweden became the first country to meet the target in 1974, although on revised GNP figures, the
achievement was postponed to 1975, by which year it was joined by the Netherlands. Norway and
Denmark reached it in 1976 and 1978 respectively, and all four countries met it for many years
afterwards, though the Netherlands has slipped below it since 2013. Finland achieved it once, in
1991. Luxembourg reached it in 2000 and continues to do so. The United Kingdom attained it in
5
“Partners in Development -- Report of the Commission on International Development”, Lester B. Pearson (Chairman), New York,
Washington and London, 1969, p. 18.
6
United Nations General Assembly, Twenty-Fifth Session, Second Committee: compare documents A/C.2/L.1104 of 25 September 1970
and A/C.2/L.1104/Rev.1 of 14 October 1970.
7
“International Development Strategy for the Second United Nations Development Decade”, UN General Assembly Resolution 2626 (XXV),
24 October 1970, paragraph 43.
8
Cf. Development Co-operation, 1969 Report, OECD, pp. 241-3; 1972 Report, p. 208. For a more detailed account of the origin of the ODA
concept, see Simon Scott, “The accidental birth of ‘official development assistance’” OECD Development Co-operation Working Paper no.
24, September 2015, DOI 10.1787/22220518.
9
At the 1971 DAC Aid Review of the United States, its representative stated that “... developed countries should endeavour to provide a
substantial part of financial resource transfer by way of net official development assistance and should make their best efforts to increase
the volume of such official development assistance ... [the United States] is not, however, in a position to accept specific targets or dates
in this respect.”
2013. But no other DAC country has met the target since it was established, and the weighted
average of DAC members’ ODA has never exceeded 0.4% of GNP. 10
The version of the System of National Accounts (SNA) promulgated in 1993 discontinued the term
“gross national product” and replaced it with “gross national income” (GNI), an equivalent concept.
The 2008 SNA has continued this approach. DAC members’ performance against the target is
therefore now shown in terms of ODA/GNI ratios.
10
France reached the target from 1981 to 1987 on the basis current at the time, which included flows to France’s overseas departments
and territories. In 1992, France withdrew the overseas departments, as well as St Pierre and Miquelon, from the historical data. On the
new basis, the highest ratio reached by France since the adoption of the target was 0.64% in 1994. Retrospective calculations suggest that,
had the ODA concept existed in earlier years, both France and Belgium would have had ODA/GNP ratios exceeding 0.7% during the 1960s,
and the total DAC ODA/GNP ratio would have been close to 0.5%.